Archive for the ‘Tax’ Category.
On Sky’s “The Nation” program with David Speers, Andrew Leigh MP joined an “all economist” panel with respected commentator Jessica Irvine, Liberal MP Paul Fletcher and former Liberal leader John Hewson. We discussed the strength of the Australian economy, the hit on budget revenues, Labor’s DisabilityCare reforms and the Coalition’s regressive parental leave scheme & “WorkChoices lite” policy.
I spoke in parliament today about a bill that will help counter tax avoidance and multinational profit-shifting.
Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill, 14 March 2013
A strong tax system is fundamental to driving innovation, entrepreneurship and economic growth, because it is only through a strong tax system that we are able to provide the infrastructure that business needs to thrive; it is only through a strong tax system that we are able to fund high-quality education and the research and development we know business depend on. So, making sure that we have a strong tax system with good anti-avoidance provisions is a pro-business measure. Those who oppose it—those who say that we ought to have a tax system with loopholes in it—are not pro-business; they are pro-loopholes. They are standing up for those who believe that there ought to be loopholes that those with cunning lawyers can use to avoid paying tax.
This bill puts in place measures that will counter tax avoidance and multinational profit-shifting. It will, as the speaker before me reluctantly acknowledged, protect significant amounts of revenue. Over $1 billion of revenue will be protected by these measures. That is what these measures are about. They are about ensuring that our tax system follows the values that Australians hold dear: the values of equality and fairness; the value of opportunity; the values that say that, just because you can hire the best lawyer in town, you should not be able to get an unfair advantage with our tax code. That is all this bill is about.
I spoke in parliament yesterday about the argument for a profit-based mining tax.
Mining Taxation, 13 February 2013
There is a lot of overheated rhetoric and debate around the mining tax, so I thought it might be useful to the House to return to the origins of the mining tax that is being discussed today: the Henry review’s extensive report into the Australian taxation system. It discussed the principles behind a profit-based mining tax. It said:
‘The finite supply of non-renewable resources allows their owners to earn above-normal profits (economic rents) from exploitation. Rents exist where the proceeds from the sale of resources exceed the cost of exploration and extraction.’
It goes on to say:
‘In most other sectors of the economy, the existence of economic rents would attract new firms … However, economic rents can persist in the resource sector because of the finite supply of non-renewable resources.’
That is the underlying reason a profit-based tax is a more efficient tax in the mining sector.
Continue reading ‘The Argument for a Profit-Based Mining Tax’ »
In parliament today, I spoke about superannuation, and about aged care.
Superannuation Legislation Amendment (Reducing Illegal Early Release and Other Measures) Bill, 11 February 2013
In 1991, the then Prime Minister Paul Keating said of the superannuation guarantee:
‘It will make Australia a more equal place, a more egalitarian place and hence a more cohesive and happier place.’
We do not often talk about happiness and superannuation in the same breath, but I think we should, because a strong superannuation system is a system that ensures dignity in retirement. It ensures that Australian retirees can enjoy that extra grey nomad trip and the comfort of being able to spend time with loved ones without worrying about paying the bills. It ensures that generations that have given much to Australia enjoy the retirement to which they are entitled.
On Sky AM Agenda today, I spoke with host Kieran Gilbert and Liberal Senator Mitch Fifield about why a profits-based mining tax has volatile revenues, why Labor is committed to seeing low-income earners pay no tax on their superannuation contributions, and the importance of politicians not meddling in criminal investigations.
This month there are a series of free financial information sessions designed to help locals take control of their finances. They are a local and practical avenue for people of all ages to gain information on a range of important topics. The Australian Government has offered the Financial Information Service (FIS) for over 20 years, educating hundreds of thousands of people by providing information to help them plan for their future security. The experienced FIS Officers can show you how to make informed financial decisions and help you understand the consequences of those decisions in the short, medium and long term. These seminars are regularly held across the country, educating communities on a wide range of topics from superannuation and creating wealth, right through to finance and accommodation options in retirement and they’re not just for people receiving Centrelink payments – they are open to anyone interested, and are popular so bookings are essential.
Upcoming local seminars at Belconnen Premier Inn (110 Benjamin Way, Belconnen)
Age pension and your choices, Tuesday 12 February 2013, 6:00 pm to 8:00 pm;
Running your own super fund, Thursday 14 February 2013, 6:00 pm to 8:30pm
For FIS seminar bookings call 13 6357 or email fis.seminar.bookings@humanservices.gov.au
To find out more about Human Services free Financial Information Service seminars visit humanservices.gov.au/fis.
I spoke in parliament today about the importance of good fiscal management.
Matter of Public Importance – Fiscal Policy, 5 February 2013
It is a pleasure to rise today to speak on an important issue of economic management. When we talk about the importance of good budget management it is important to remember one simple fact: if the tax-to-GDP ratio today were the same as it had been under the Howard government then the budget would be strongly in surplus.
Dr Emerson: By more than $20 billion.
Dr LEIGH: By more than $20 billion, I am informed by the minister. But if the tax-to-GDP ratio under the Howard government had been what it is today then many of their budgets would have been in deficit. That is a simple fact which those opposite cannot deny. Driving things at the moment are two big factors. First of all, mineral prices have softened, and that has brought down corporate revenue. Second, the Australian dollar remains high. Why does the Australian dollar remain high? Because Europe is underperforming. With Europe underperforming, investors are looking around the world to where they can find AAA-rated government debt. And they are finding it in Australia, one of the few countries that maintains that AAA rating. Despite the fact that minerals prices are coming off, the Australian dollar remains high. So this double-whammy hits revenues, and this is reason revenues for 2012-13 are $20 billion down from what Treasury projected in 2010.
I have an opinion piece in the Australian today, continuing to prosecute the case that Labor is the true party of small-L liberalism in Australia (on the same theme, see also my first speech, this Global Mail article and this speech to Per Capita).
Liberals are conservatives while Labor is the true party of Alfred Deakin, The Australian, 10 January 2013
In the United States, if you want to insult a right-winger, call them a ‘liberal’. In Australia, if you want to insult a left-winger, call them a ‘Liberal’. In both countries, liberalism has become detached from its original meaning.
It’s time to bring Australian liberalism back to its traditional roots. Small-L liberalism involves a willingness to protect minority rights (even when they’re unpopular) and a recognition that open markets are the best way to boost prosperity.
In 2008-09, I was seconded to Treasury. It was an extraordinary time to be there, seeing how a good response to fiscal stimulus gets crafted. And while I was an SES officer, my short stint meant that I did much more listening than talking.
But one thing I can claim credit for is the suggestion that when the $900 tax payments were being delivered in 2009, that the timing should be randomised by postcode, so as to allow the possibility of a subsequent randomised evaluation.
I’m pleased to report that such an evaluation has now been done, with my former ANU colleagues Emma Aisbett and Ralf Steinhauser (along with Markus Brueckner and Rhett Wilcox) combining a list of random postcodes with household spending data from AC Nielsen’s Homescan survey.
While their research finds little impact on some types of spending, it’s not hard to see why this is at odds with other studies – including mine- which find a large impact of the Australian fiscal stimulus on expenditure.
The problem is that while the Homescan dataset is the only one that lets you measure week-to-week spending patterns, it only captures groceries. So if someone spends their cheque on a washing machine, bicycle or restaurant meal, it gets missed.
The other factor is that this new study is very short-term. So if groceries spending went up after a two-month delay, it wouldn’t be captured.
So it’s perfectly consistent to note that the stimulus had a big overall effect, while also observing more limited impacts on narrow categories of spending. And I think the totality of the evidence is useful – unlike some evidence from the US, Australian households are typically not so badly off that their initial response to receiving a $900 payment is to stock up the fridge.
My La Trobe University chat with moderator Robert Manne and Greens MP Adam Bandt (‘The Future of the left in Australia: Labor and the Greens; friends or enemies?’) is now available as a podcast via ABC Radio National Big Ideas and a vodcast via Slow TV.
On Sky AM Agenda, I spoke with host David Lipson and Liberal MP Kelly O’Dwyer. We discussed budget measures (including Labor’s focus on efficiencies over the Coalition’s job cuts), the resurgence of closed-economy thinking in the Coalition, and Labor’s important achievements over the past five years.
Last Wednesday, I spoke with La Trobe University economist Jan Libich about some of my academic findings – from teacher pay & aptitude to child gender & divorce – and possible policy implications. If you want to read more, the research is available at my academic website: www.andrewleigh.org.
And if you’d like to watch Jan’s other interviews (including with Eric Leeper and Don Brash), they’re available on his YouTube channel.
In the latest Quarterly Essay, I’ve penned a response to Laura Tingle’s discussion of the role of government, social spending, and whether Australians are congenitally cross.
Response to Laura Tingle’s Quarterly Essay ‘Great Expectations’
Published in Quarterly Essay #47 (2012)In 2002, David Moss described the role of government as being the ultimate “risk manager.”[1] Governments, Moss believed, ought to act as a backstop for things that might go wrong in our lives. Just as we buy private insurance to pool our risk with other customers, so governments allow us to pool social risk across other citizens. You can think of your taxes partly as an insurance premium.
The notion of government as risk manager doesn’t cover the full gamut of what governments do, but it does encapsulate many of their important roles. For example, governments help guard against overseas threats and keep our streets safe. Managing risk explains why we have a social safety net to guard against the risk of poverty, a public health care system to deal with the risk of illness, and a public education system to remove the risk that a poor family might not be able to afford to educate their child.
The long tail of academic publishing means that two years after leaving my professorial post at ANU, I’m still having pieces appear in the journals. In case it’s of interest, here are the handful of publications that have come out in 2012.
All my academic work – including many replication datasets – is available at www.andrewleigh.org.
I have an opinion piece in today’s National Times on immigration and the mining boom: two of the intersecting challenges that Australia is going to be wrestling with over coming decades.
Boom times need not be a bust, National Times, 9 August 2012
Australia’s resource boom is such a colossal shock that it can be hard to get your head around its many impacts. Try these facts, for example. In Moranbah (Qld), the average house price over the past year has risen from $459,000 to $730,000. Hundreds of Australians now work as fly-in, fly-out workers, including some who have chosen to commute from Bali. The cost of developing the Gorgon gas project will be $43 billion – about the GDP of Lebanon. Historically, Western Australia has had a similar level of inequality to other states. Now, it’s the most unequal jurisdiction in the nation.
With some of my Labor colleagues, I’ve been spending time recently working to better understand the diverse impacts of the mining boom, and thinking about how best to spread the benefits across society. We’ve spoken with mining firms and construction companies, unions and social welfare groups, discussing both the upsides and the challenges.
Here’s my Chronicle column for this month.
Lessons Important for Us All, The Chronicle, 3 July 2012
In his splendid new book, Thinking, Fast and Slow, psychologist Daniel Kahneman talks about how reluctant we are to change our minds. To illustrate his point, Kahneman tells the story of how and his fellow psychologists would evaluate candidates for leadership in the Israeli army. They would set difficult challenges – such as one in which a team of eight soldiers had to use a long log to get each of them over a six-foot high fence without touching the fence. At the end of the exercises, the psychologists were confident that they had determined which of the soldiers had leadership potential.
Continue reading ‘Army Assessors, Tax Refunds and Education’ »
I moved a private member’s motion in the House of Representatives today on the strength of the Australian economy, and the need to approach economic debates with facts rather than fear (avoiding phobophobia).
A Strong Australian Economy
18 June 2012I move: That this House:
(1) notes that:
(a) by historical standards, unemployment, inflation and interest rates are at very low levels;
(b) for the first time in Australian history, Australia has a AAA rating from all three major credit rating agencies;
(c) Australia’s debt levels, despite the hit to revenues from the global financial crisis, are around one tenth the level of major advanced economies;
(d) OECD Economic Outlook 91 confirms that the Australian economy will significantly outperform OECD economies as a whole over this year and next; and
(e) the IMF has said of Australia: ‘we welcome the authorities’ commitment to return to a budget surplus by 2012-13 to rebuild fiscal buffers, putting Commonwealth government finances in a stronger position’; and
(2) calls upon all Members to approach economic debates with facts rather than fear, and to put the national interest first when discussing the strong Australian economy.Economic reform in Australia has never been easy. In the postwar decades, the conservatives built up a tariff wall that helped make Australian industry uncompetitive and kept consumer prices high. In 1973, Gough Whitlam began the long process of breaking down Australia’s tariff walls—the 25 per cent across-the-board tariff cuts.
Continue reading ‘Putting Facts Before Fear in Economic Debates’ »
A short speech on our economic strength and the importance of tax reform.
Tax Laws Amendment (2012 Measures No. 3) Bill 2012
Income Tax (Seasonal Labour Mobility Program Withholding Tax) Bill 2012
Tax Laws Amendment (Income Tax Rates) Bill 2012
30 May 2012On a blog post on 8 December last year, Possum Comitatus—aka Scott Steel—wrote of ‘Australian exceptionalism’. He wrote:
‘Never before has there been a nation so completely oblivious to not just their own successes, but the sheer enormity of them, than Australia today.’
It is within the context of that extraordinary economic performance—unemployment, inflation and the cash rate each below 5 per cent for the first time in 40 years—that we are considering this package of bills.
I’ve spoken twice in parliament this week about the economics of the budget and the opposition’s problematic costings.
On Sky AM Agenda today, I spoke with host Kieran Gilbert and Liberal MP Kelly O’Dwyer about the return to surplus, the need for the Opposition budget reply to put forward some real policy, Peter Costello’s mooted comeback, and same-sex marriage.
On Sky’s Lunchtime Agenda program, I joined host David Lipson and Liberal Senator Arthur Sinodinos to discuss how a budget surplus puts downward pressure on interest rates, and why a National Disability Insurance Scheme is a higher priority than tax cuts for millionaires and billionaires.
In a recent forum at the ANU Crawford School, I joined Reframe author Eric Knight, change.org‘s Rebecca Wilson, Liberal MP Joshua Frydenberg and Big Ideas host Paul Barclay to discuss the topic ‘Beyond Populist Politics and Policies’. A podcast of the show (from ABC Radio National) is now available.
I held one of my regular community forums at lunchtime today at the Belconnen Community Services theaterette (‘theatre@bcs’). I started off speaking about the mining tax package, which has just passed the parliament, and will provide for a cut to the company tax rate, an increase in superannuation, and more investment (particularly in the mining regions).
There were a wide variety of questions, covering the Gonski review of school funding, local arts facilities, the National Disability Insurance Scheme, refugee policy, the purchase of submarines, the lack of a letterbox at the Kangara Waters community, defence force and public service pension indexation, the adequacy of footpaths in the city centre, the merits of taking on debt to pay for fiscal stimulus, the frequency of grass cutting, household assistance in the carbon pricing plan, and the effect of federal pension increases on ACT public housing costs.
I enjoy the interplay of ideas at these forums, and welcome anyone who lives or works on the northside of Canberra to come along to a future community forum.
This forum was held on a weekday lunchtime, but there’s no perfect time of the day for a community forum, so I aim to vary the dates and times to allow as many people as possible to attend. For details of upcoming forums, click here.
On ABC 666 this morning, I spoke with Ross Solly and Liberal Senator Gary Humphries. Topics included the benefits of a profits-based mining tax, why the government chose the most capable person to run the Future Fund, and the importance of not bringing into play the character of a victim of an alleged sexual assault. Here’s the audio.
Kelly O’Dwyer and I had a pleasant chat this morning on AM Agenda with Kieran Gilbert. Topics included the Gillard Government’s company tax cuts (opposed by the Liberal Party) and Opposition scaremongering on guns and crime.
Parliament this afternoon chose to debate a Matter of Public Importance that I’d proposed.
My MPI was ‘The urgent need for market-based reforms and for strict and transparent budgeting’. Here’s my speech.
Matter of Public Importance – ‘The urgent need for market-based reforms and for strict and transparent budgeting’
13 March 2012Today’s matter of public importance is on the need for market based reforms and the need for strict and transparent budgeting. I want to start by talking about market based mechanisms in dealing with environmental challenges. This used to be a pretty controversial area, and in fact the first person to raise it was none other than George HW Bush, who suggested that we might deal with environmental challenges by putting a price on the externality. He faced objections, but the objections at that time came from the Left. It was those on the progressive side of politics who took some time to come around.
Continue reading ‘Market-based reforms and transparent budgeting’ »
I have an opinion piece in the National Times today on the implications of the leadership challenge for the future direction of the ALP.
Party values must rise to the challenge, National Times, 28 February 2012
When they’re in progress, political leadership challenges are like cyclones: throwing policies into disarray, snapping friendships in an instant, and hurling participants off into the distance.
Yet as history shows us, the morning after a leadership challenge often dawns clear. Gough Whitlam saw off two leadership challenges from Jim Cairns before gaining a large swing in the 1969 election, and going on to win in 1972. After the Coalition’s loss in the 1993 election, some worried that leadership infighting would doom them to irrelevance. Three years later, united around Howard, the Coalition won a crushing victory and 11½ years in office.
I spoke in parliament today about the government’s Minerals Resource Rent Tax package.
We had some rather spirited exchanges in this morning’s economics committee hearings over the Minerals Resource Rent Tax.
For anyone interested in the details, here’s Treasury’s critique of the analysis conducted by BDO accountants for Fortescue, including discussion of its mathematical error.
Incidentally, BDO and Horwath (who did the costings for the Opposition’s 2010 election campaign) are a merged firm.
(Cross-posted on the ALP blog, which is the place to leave comments.)
In Lewis Carroll’s Through the Looking Glass, the White Queen tells Alice: ‘Why, sometimes I’ve believed as many as six impossible things before breakfast.’
I was recalling this line the other day when thinking about the task faced by Tony Abbott. Here are the six impossible things that the Opposition Leader has to believe before breakfast every day.